Insurance is a Commodity: A Continuing Series

I was reminded today of how many insurance companies actually make a profit: Premium Financing.

The idea is that an insurer accepts some credit risk from the policyholder by not getting all the money up front but charges some insane interest rate on the loan (like, credit card interest insane).

The published rates are therefore cheap, generating much less money than would actually be needed to run the company. Insurance regulators can cheerfully pat themselves on the back, though, because rates are low.

Customers are obviously fine because, like with mobile phone plans, the deal appeals to their huge discount rates.

The trick, of course, is that because this is the only profit these companies ever make, they have to shield it from everyone, particularly reinsurers. Imagine a Joint Venture where the costs are split 50/50 but the revenue is split 60/40. Big problem.

And because most of the companies that work this way are small (for some reason), they are heavily reliant on reinsurance. So they desperately need this service (reinsurance), but simply cannot afford to pay full price for it.

These clients are the biggest pain in the ass. Honestly.

Review of *Foundation*

As a fully-credentialed geek, I’m ashamed to admit I’d not read *Foundation* until recently. How it managed to elude me during my voracious teenaged dork-heat, I’ll never know.

The book is a collection of stories centered around dramatic moments in the history of Terminus, a small planet in the outer reaches of the galaxy. Terminus isn’t just some backwater, though, it is a colony designed by Hari Seldon, a visionary who foresaw, though the power of the academic discipline of psychohistory, the collapse of the Galactic Empire into a dark ages to last tens of thousands of years. He hatched a plan to shorten those dark ages to a single millenium by planting the seed for a successor empire. On Terminus.

The book is pure big-picture. The characters are a bit weak but the setting is a vast original universe that makes everything seem fresh. This cuts right to the heart of sci-fi: put boring people in amazing situations. The best of Sci-Fi teaches you something. Changes you. Foundation does that, but not through plot.

Because I probably should explain it, here’s the plot framework of each of the vignettes in the story:

Hero and Rival vie for political power to confront some Threat. Hero outfoxes Rival with style and humor.

Hero deliberately does nothing.

Economics defeats Threat.

(Repeat)

The sci-fi fan in me loves the scale and imagination of the setting: dying galactic empire and all that. And each of the conflicts is resolved by some plot twist or exceptional bit of cleverness by the hero in dramatic fashion. It’s pulpy stuff: bad guys pulling ahead until the good guys win in style.

As a 15-year-old, my review would have ended here. But I’ve got a bit more to say, now.

Psychohistory is ridiculous. It’s a caricature of sociology/economics, of course, but it is in extremis that we learn how silly a strong interpretation of the power of social science really is. That, to me, is what one should take away from the book: social science is incredibly limited. Asimov might have been sympathetic to this idea since the book’s treatment of psychohistory is inconsistent.

At first there are a lot of references to how psychohistory is only useful for large, general predictions, yet there are these unbelievably dramatic appearances of Seldon holograms (who is long, long dead) that coincide with political crises. He recorded helpful messages and set a timer hundreds of years earlier that flipped the thing on at exactly the right moment! A general tool with such precision power? Why the contradiction?

I imagine a Hollywood producer and writer in Asimov’s head fighting over what makes sense and what sells: “there’s no way Seldon would predict, down to the minute, when such a crisis would occur, this is so stupid”, says the writer. “Whatever, responds the producer, we need some drama in here or people will think it’s boring. The audience cares more about excitement than believability. Get over yourself”. And in it goes.

It’s also interesting to contrast Hari Seldon with the Heros of each vignette. Hari Seldon is an academic’s fantasy, a grand puppet master, while the Heros are more like Odysseus: counter-punching, wheeling and dealing.

Without the psychohistory, this book would be a libertarian economist’s wet dream, all spontaneous order and incomprehensible forces overwhelming deliberate action. The do-nothing Odysseus heroes have minimal effect on events and rely mostly on their ability to identify the current and swim with it.

And yet. Attribution bias means heroes and villains are here to stay. Faceless economic forces grinding away in the quintessence makes for a lifeless story.

I originally planned to cover all three books in the original trilogy, but something deep is lost as the series progresses and I never made it past the second book. The story becomes more character and plot driven, but characters aren’t really any more interesting than in the originals. We are just forced to spend more time with them.

The original book was given strength by the short story format. It allowed Asimov to carry around a massive universe in his head and tantalize us with the odd peek here and there. I am reminded of Tolkien’s Middle Earth (or, in a different way, the Marvel or DC comics universes) where there is really almost no end to how deep down the rabbit hole you can dive, these realities are as complete as fiction can be.

But you’re held back by how much material has been printed, which always worked like a charm on me. I’m one of those geeks that would buy maps and encyclopedias on fictional universes, textbooks to learn about things that don’t exist.

The plots just slow me down.